What to Expect When Applying for a Personal Loan at Lending Club

Earlier this week I reviewed the process for applying for a loan on Prosper. Today we will look at Lending Club where I applied for a $2,500 loan last week.

The borrowing process, detailed in the video below, was again a smooth and simple experience. But I encountered one major challenge. Lending Club rejected me outright for a loan. When I called and questioned them on this they said that I had too much debt for someone with my income. As I explained in the previous post, I have very little income outside investment income and I do carry a mortgage. So, despite my 815 Transunion credit score I received an “Adverse Action Notice” email giving me the bad news.

A P2P Loan at a 6.03% Rate

Luckily I had a plan B. I really wanted to understand and review the borrowing process at both Prosper and Lending Club so I applied for a loan in my wife’s name. Wouldn’t you know it, she was approved for a loan with an A1 grade and a rate of 6.03%. What was curious is that she had less than half my income (and it is pretty much all investment income – my wife is a part time yoga teacher and a stay at home mom) but no debt whatsoever. The home mortgage is in my name and so, despite a low income, her debt-to-income ratio was just 2.96%. Obviously this number is very important to Lending Club.

The biggest difference between the loan on Prosper (at 31.99%) and the one on Lending Club (6.03%) is the speed at which my loan funded. On Prosper it was less than 24 hours but on Lending Club it took five days. Despite that big difference in funding the money from Lending Club was in my account very quickly – just eight days (six business days) after my application was filled out.

Get Your Interest Rate Quickly

Like Prosper, Lending Club was able to quote an interest rate very quickly. Just two screen and five minutes into the process and I had my interest rate. They also gave me the option to increase of decrease my loan amounts and provided the corresponding monthly payments.

Here is the timeline for my loan application at Lending Club:

Tue 9/13 – Applied for a loan on LendingClub.com
Wed 9/14 – Loan is active on the platform for investors
Thu 9/15 – Lending Club called to verify personal details
Mon 9/19 – Loan fully funded by investors
Tue 9/20 – Loan issued
Wed 9/21 – Money appeared in my bank account

The underwriting algorithm remain a bit of a mystery to me. Obviously the amount of home debt is very important and the amount of income you have less so. But beyond that I really cannot come to any logical conclusions about why I was rejected and my wife obtained a A1 loan.

Regardless of my personal experience the process for obtaining a loan was quick and easy. The total amount of time needed including the phone call was less than 15 minutes. Lending Club kept me informed throughout the process and the money was in my account before they promised.


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Sep. 23, 2011 12:57 pm

Very interesting to see the getting a loan process. Thanks so much.

Sep. 23, 2011 6:20 pm

Hi, thanks thats very usefull, do you have the same examples in order to understand the lenders process.

Sep. 29, 2011 8:22 am

Thanks Peter for the link to the LC IRA. I’m pondering that. It would be nice to pull my current IRA out of it’s 1% to 9% or ever 20%.

Sep. 29, 2011 10:18 am

It sounds like Prosper gave you a loan at 31.99% and Lending Club would not issue you a loan. Lending Club gave your wife a rate of 6.03%. I would be curious, if your wife applied on Prosper, what would her rate be as compared with Lending Club.

Sep. 29, 2011 1:05 pm


Back in April, I did the same thing you did—I applied for a loan at Prosper to see their process.

Here is my loan:


Notice my high credit score and income, but I too received a 31.99% rate due to being “self-employed”. I know that both LC and Prosper are still constantly tweaking their algorithm, I think still have a ways to go in getting a large enough sample size to more accurately reflect an appropriate interest rate on loans.

One item that totally skews the DTI ratio and utilization rates are home equity lines, which Prosper (as do credit reporting bureaus) lumps into total (credit card) debt, so a borrower with $1000 in credit card debt and a $100,000 HELOC, would show up with $101,000 in debt, and a very high DTI ratios and utilization rate.

Sep. 29, 2011 2:54 pm


You didn’t miss out much on my loan (it funded in 36 minutes), I tested several processes (minimum payments, large payments, etc) and paid it off in 2 or 3 months.

I may take out another one in the next few months, to test out a few more items. Only thing stopping me right now is the large origination fee (4%, I believe). I’m just waiting for some promo email, like “come get another loan, we’ll waive the origination fee” or something similar.

FYI—for those interested in borrowing, but hesitate due to the steep origination fee, in the past, if you began the loan process, but don’t complete it, Prosper would send you an email offering a $50 bonus to complete the loan (on a $2000 loan, that covers a large chunk of the origination fee). I’m not sure if they still do that, but I assume they do.

I’ll update if I have any further info.

Sep. 30, 2011 11:38 am


Maybe they stopped offering the discount?

As for this note, I figure that with WB making his moves at 9AM & 5PM, if I want to invest, I just log in during those times :


The good thing about this note funding in 3 minutes, is it was Aberdeen that completed it, not worth-blanket.

It can be a bit worrisome when one lender funds 25% of all notes. What happeneds to Prosper if WB decides that his $150M can do better elsewhere???

Nov. 14, 2011 12:40 am


They did the same thing to me!! 775 score, gross income $200k+ with less than 35% debt with my house!

I was floored! And I already have a loan with them for over 18 months, never paid a second late.

Bye Bye Lending Crap! Never again will I waste my time!

Nov. 14, 2011 12:43 am

Oh and yes I proudly own my on business for 6 years now.

Apr. 21, 2012 10:18 pm

I had aloan 100% funded, provided LC tax returns, 1099’s and 4508 and got an email that they were unable to verify income for self employed, try back in 8 weeks. credit score is 764, loan rate was 7.9%.

how can I make sure they destroy my information completely?

May. 29, 2012 11:37 am

Thanks for a great article. I’m curious, do you have to justify the reason for a loan, for example, do you have to prove you want a loan for say a home improvement etc?


Mar. 23, 2017 11:49 am

Does the loan show up on your credit?